The causes of the crisis have not gone away

Ten years ago today the first ripples of what became the financial crisis hit the markets. On the evening of Aug 8 2007, BNP Paribas, France’s largest bank, told clients that it was suspending three of its funds, because of the “complete evaporation of liquidity”, which made it impossible to value its assets.

This was the moment it first became apparent that there were billions of dollars of dodgy sub-prime derivatives stuffing the system. At that point, the market in asset-backed commercial paper had ballooned to $1.2 trillion (£900bn).

As concerns about the woeful state of the sub-prime market started to be realised, banks, insurance giants and pension funds stopped lending to each other, fearful that a glut of undisclosed losses were hiding on their rivals’ books. It took five days after BNP Paribas froze its funds before the tremors were felt at Northern Rock and another month before the stricken building society agreed emergency funding from the Bank of England. And yet, despite its bailout, many still believed it was a blip, with BNP Paribas calling its fund freeze a “technical issue”. It took more than a year and the dramatic collapse of Lehman Brothers to roughly shake the rest of the world awake to the horrific realisation that the global financial system could implode.

Since then, there have been overhauls, investigations, ringfencing, stress-testing and boardroom reshuffling. Banks have paid billions in fines since the start of the financial crisis. And yet low interest rates have encouraged leverage levels to creep higher, house prices have continued to balloon but wage growth has failed to return to pre-recession times. And as inflation creeps back into the market, partly due to higher costs associated with a falling pound, and incomes are squeezed, there is chatter of returning to 100pc mortgages.

We are waking to the risks associated with Brexit, low interest rates and global political uncertainty. The next problem will be, to quote Donald Rumsfeld, “the unknown unknowns”. The last crash was caused by overly complex products that few people understood, created by banks that were too big for outsiders, or insiders, to understand or quantify the risks. That problem has not gone away.

It took a year for the ramifications to be felt last time – but it’s unlikely that the next crisis will follow the same playbook. This time around, thanks to the advancement of technology and the pace of news in this digital era, the damage could be inflicted at hyper speed.

Alexander leaves a lasting legacy

Dame Helen Alexander’s death over the weekend means British business has lost one of its best ambassadors.

The first female head of the CBI, Dame Helen has been deservedly praised for having one of the toughest roles in defending the City and holding it to account during a time when anti-capitalism was in vogue.

Intelligent, principled and hardworking, most of the messages of condolences have focused on an underrated business trait – being a decent and likeable person.

Sir Roger Carr, the BAE chairman, who had been with her at the CBI, spoke warmly on the Today programme of her “strong family values” and an obituary by her old firm, The Economist, recounted how her diary was regularly cleared for family time. This wasn’t the case of a boss claiming they liked spending time with their kids as a way to boost the list of interests on their CV. Little is often made about the sense of perspective family life can offer in business, particularly in boardrooms that are often filled with people drunk on their own self-importance, but Dame Helen clearly appreciated it.

Her leadership skills saw her claim seats on the boards of Northern Foods, Centrica, Rolls-royce and Huawei, she advised private equity firm Bain Capital, and most recently chaired events business UBM.

Notably, Dame Helen was also a champion for encouraging successful women into senior business positions and authored a report, along with Sir Philip Hampton, that set out the ambitious target for a third of senior boardroom positions to be taken by women.

The Hampton-alexander review is still taking submissions from companies about how they are meeting that goal, one year on. But separate figures reveal that the percentage of women on FTSE 350 executive committees remains stuck at 16pc, while the number of women in profit and loss roles has flatlined at just 6pc. The best remembrance for Dame Helen will be if more businesses follow her example.

‘Thanks to digital news, the next crisis could be inflicted at hyper speed’